I am Director of Entitlement and Budget Policy for the Heartland Institute, Senior Advisor for Entitlement Reform and Budget Policy at the National Tax Limitation Foundation, General Counsel for the American Civil Rights Union, and Senior Fellow at the National Center for Policy Analysis. I served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush. I am a graduate of Harvard College and Harvard Law School, and the author most recently of America's Ticking Bankruptcy Bomb (New York: Harper Collins, 2011).
I write about new, cutting edge ideas regarding public policy, particularly concerning economics.

Under Obamanomics, America Stumbles Into Another Recession

U.S. President Barack Obama (C) signs the the financial reform bill into law on July 21, 2010 in Washington, DC. (Image credit: Getty Images North America via @daylife)

The Democratric Party controlled mainstream media reported the November unemployment report as “better than expected.” But in reality it showed that America is stumbling along into a second Great Depression under “Obamanomics” and associated “Progressive” fallacies.

Another 350,000 Americans dropped out of the labor force in November, bringing the total dropping out since President Obama entered office to 5.4 million. That is unprecedented for any such extended period since the Great Depression, and probably before. Yet, none of these people are counted as unemployed, because they are counted as not in the work force at all.

That declining work force is the only reason the unemployment rate was reported as declining to 7.7%. At this pace, Obama is on track for 0% unemployment, when the labor force declines to zero as well. If America just had the same labor force participation rate as when Obama entered office, and so many had not dropped out of the work force, the unemployment rate would be 10.8%, not 7.7%.

While the Bureau of Labor Statistics (BLS) reported 146,000 new jobs created in November, it also adjusted downward the jobs reported created for September and October by 49,000, leaving the total net new jobs created in November at 97,000. (The 146,000 new jobs is counted from the new base reduced by 49,000, so the net new jobs created in November were truly only 97,000). The number reported as dropping out of the work force was 3.5 times greater than the number of net new jobs created in November.

The BLS reported 12 million Americans unemployed in November. Unemployment was most severe for the groups that have supported Obama the most – blacks (13.2%), Hispanics (10.0%), and youth (23.5%). The new jobs created since Obama became President amount to less than 1% of the new additions to the working age population (the growth in young adults plus immigrants).

The BLS also reported the number of Americans working part time for economic reasons at 8.2 million for November. “These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job,” the BLS explained.

Another 2.5 million Americans were reported as marginally attached to the work force in November. “These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months,” the BLS explained.

That amounts to 23.7 million Americans unemployed or underemployed. The BLS reports the unemployment rate (U6) including them as 14.4% for November. That is already Depression level unemployment.

But that number only includes workers who have become discouraged and dropped out of the work force within the last year. Starting in 1994 under the Clinton Administration, the BLS stopped counting as unemployed in any unemployment rate number at all the number of discouraged workers who had become discouraged and dropped out of the work force for more than 1 year. Those Americans are counted, however, at Shadowstats.com, which reports the total unemployment rate for November including them to be a Depression level 22.9%.

The recession was scored by the National Bureau of Economic Research (NBER) as starting in December, 2007, and ending in June, 2009. That was already the longest recession since the Great Depression. The much bigger problem is that there has been no real recovery since then. What we have suffered instead, according to the numbers, is the worst recovery since the Great Depression.

Total employment as of November was still 3.2 million jobs below its peak just before the recession started, 5 years ago! Yet since then, the working age population has increased by 11.2 million. That is why America is now still 14.7 million jobs short of full employment.

This is the worst performance since the Great Depression, and probably before. In every other recession since the Great Depression, employment soared past its prior peak within a year or two after the recovery. During Reagan’s recovery, 60 months after the prior peak, when the recession started, employment was breaking new records, with jobs 7.8% above that prior peak. As Louis Woodhill reported at realclearmarkets.com on December 10, “If the Obama recovery had been as strong as the Reagan recovery, there would be 14.8 million more Americans working right now.”

Obama’s poor jobs record reflects his poor record of economic growth. Since the start of the recovery 13 quarters ago, real economic growth has averaged 2.21%. During the first 13 quarters of the Reagan recovery, real economic growth boomed by an average of 5.67%, more than 2 ½ times higher. Obama apologists can’t argue that Obama’s recovery is so bad because the recession was so bad. The American historical record is the deeper the recession the stronger the recovery.

That poor record of jobs and economic growth is the reason why middle class incomes have declined so sharply under Obama. Median household income has declined by over $4,000 a year since Obama became President, or the equivalent of losing one month’s income every year. Moreover, the decline has been twice as fast after the recession supposedly ended than during the recession. As the Wall Street Journal summarized in its August 25-26 weekend edition, “For household income, in other words, the Obama recovery has been worse than the Bush recession.”

That poor record on jobs, incomes, and economic growth is also the reason that poverty has soared under Obama. More Americans are in poverty today than at any time in the more than 50 years that the Census Bureau has been tracking poverty. This is how we know that Obama loves poor people, because he is creating so many of them.

How long should America give Obama to get the country past the recession? Before this last recession, America’s recessions since the Great Depression lasted 10 months on average, with the longest previously at 16 months. But here we are 60 months after the last recession started, and still no real recovery. Based on the historical record, we should be completing now the third year of an historic boom.

The chief excuse of the Obama apologists is that what we have suffered was not just a recession, but a financial crisis, and, they argue, recovery from a financial crisis takes a lot longer than recovery from a recession. But that is not the experience of the American, free market, capitalist economy. The experience of the American economy is reported in full at the National Bureau of Economic Research, as just cited above. That is the standard by which the performance of Obamanomics is to be judge.

The Obama apologists rely on the book, This Time Is Different: Eight Centuries of Financial Folly, by Carmen Reinhart and Kenneth S. Rogoff. But that book changes the subject, basing its argument on data that “covers sixty-six countries over nearly eight centuries.” It “goes back as far as twelfth century China and medieval Europe.” The data “come from Africa, Asia, Europe, Latin America, North America, and Oceania.” But that experience does not set the standard of expectations for post depression, free market, capitalist America over the last 70 years, the most powerful economic engine in the history of the world.

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The clean-up of the housing crash and bust Is by far not over or recovering yet. Painfully we suffer the misjudgments of men Greedy for profit and free from regret.

Far too many are out of work and looking for jobs More than any time since the Great Depression of the past. Food and fuel cost more every day that we live As the futures of America and the World are cast.

A true measure of change is our only hope We must turn to prayer seeking God’s answers to renew. Honesty, humor, faith and integrity Are all we need to practice and pursue.

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ELECTION = 2012 POEM

With looming worries about jobs, homes and healthcare College debt, Afghanistan, terrorism and disease. Americans seek clear options this November As we pray for those we vote for on our knees.

America needs a president who relies on faith and prayer One who can lead by example, servitude and more. Someone who loves our freedom and heroes of the past Who inspires us like none we have known before.

Whoever wins the final vote when tallied We pray they succeed and restore America’s glory. The time has come for all of us to rise up and change As freedom, love and commitment become our story.

If President George Washington was alive and well And spoke to America of troubles we face today. I wonder what he might faithfully suggest And would we heed to anything he would say?

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Yes the LPR has declined under President Obama, as it has been declining every year since January of 2000 when the highest rate was recorded (67.3%). The LPR has not returned to that level since. Under President George W. Bush, it declined from 67.2 when he was inaugurated to 65.7%. Did Mr. Bush cause that decline? No, of course not. Neither did Mr. Obama cause the further decline. Presidents do cause demographic shifts like that.

believe that it is useful to point out that between 1948 (when records were first collected) and 1969 the LPR was never over 60%. This is a period of what most people consider the acme of US economic prosperity and the LPR averaged 58%. This means that the generally perceived prosperity of the average American in this period was supported by a work force that constituted less than 2/3rds of the population.

The participation rate increased dramatically in the 1970s and 1980′s and peaked in the late 1990 and early in 2000. This parallels the general decline in overall economic prosperity the US Labor force. What this means is that more people were forced to enter the work force because the existing working population were unable to earn as much as they had in the past.

This was the era when more and more women entered the work force. Some entered for personal fulfillment but many entered because they had to, because families could no longer survive on the income of one head of household. This corresponds to the decline in US manufacturing and the exporting of capital overseas.

It is that many more people have simply given up trying to find a job (people are counted in these statistics if they are either working or actively trying to find work). “Discouraged workers” are not “participating” in the labor market. The number of discouraged workers has increased, both in absolute numbers and as a percentage of the population, there is no doubt about that.

The point however, it is completely dishonest to suggest that Mr. Obama is somehow the cause of widespread labor “discouragement”. The decline of US employment has been well documented and been occurring for decades. As the industrial base of the US has declined over the last four decades, these middle strata of workers has been slowly declining. The City of Detroit is the bellwether of this process. Once the industrial envy of the world, it supported a huge industrial working class with single family detached homes and two car garages. Further, it supported huge service sector which provided the needs of those industries and workers. Today it is a dusty ghost-town. What has happened in Detroit has happened less visibly in hundreds, indeed thousands, of other localities. Men who were machinists in factories are now driving cabs. Women who were managers in factors are clerks at K-Mart. Multiply this across millions of Americans and you have discouragement and declining participation.

David, You are consistently an encyclopedia of misinformation. The 1980s inaugurated a period of capital flowing into America from the world over. Hence Reagan’s strong dollar. The 1980s also inaugurated an “economic golden age” in the words of Steve Forbes, an actual workers’ paradise, which people who lived here during that time and didn’t recognize don’t deserve. That didn’t end until Reagan’s policies were abandoned. It is precisely the opposite Marxist policies of President Obama, which are precisely the cause of the worst recovery since the Great Depression, and the economic decline of America, as I predicted in the pages of the Wall Street Journal in February, 2009. To use your terminology, I would have to say it is you who are dishonest until you admit that.

If you listen to the discussion regarding the most recent school massacre, you’ll notice that it falls sharply on party lines. Those that favor gun control use it to reinforce their position. Those who favor gun ownership rights argue that an armed and properly trained individual at the right place and right time could have stopped the massacre before it started

It’s the same thing here with the same miniscule amount of data to back the position. Those that blindly genuflect to tax cuts as the solution to all problems of humanity tirelessly argue that Reagan’s policies would send the economy zooming despite the fundamental differences in the situations. It’s sad.

The fact is that the West has been the primary engine of the world economy for decades. China, India, Japan, Brazil and many other countries grew their economies based on selling products to the West. Now the West is spent. Governments and consumers alike are in debt up to their yin-yangs, and even if you could squeeze some more blood out of this turnip, it won’t be much. A new dynamic is going to take shape in the world economy, and it will take years to make the shift.

Snooki, Read my 2011 book America’s Ticking Bankruptcy Bomb and you will see the argument is not based on a minuscule amount of data, but voluminous data and economic logic. The West is spent because folks who think like you are in power, and logic is in short supply these days. Replace the jokers with wise men and women who understand capitalism and the American Dream will be restored stronger than ever, as the book explains in great detail.

I disagree that people who think like me are in power. I’ve never heard anyone in power even hint that Paul Ryan’s plan was a chump plan and that much more severe cuts to Medicare (and SS and many other programs) need to be made. I’ve never heard anyone in power firmly say that the Dems and Repubs are partners in causing this fiscal mess that we find ourselves in. I never heard anyone in power express that over the last 3 decades we’ve financed the appearance of prosperity through borrowing. I’ve never heard anyone in power suggest that the current short-term economic trough we’re in might be a result of extra-government factors that can’t be fixed overnight with a simple change in policy. I’ve never heard anyone in power say that we are in deep doo doo and that it’s going to take a long, long time to dig out.

What I do hear from people in power are people blaming the other side, waking up early in the morning and sometimes staying out until late at night just looking for something to support their pre-written narrative that the other side is the cause of all our ills. I hear chumps with law degrees saying that their economic plan will cure the economic problems that plague our nation just like that. People who think the government is the be-all and end-all and has absolute control over the economy and that a government policy will cure all society’s economic ills. These are the types of people in power.

Recession?..I know you don’t want to hear this but we’re in a “Depression” it sounds scary “shocking” yep.. but it’s true, if it wasn’t for the 120 million+ of us getting a government check there would be absolute anarchy in the streets. The bread lines would stretch from New York to Los Angeles. How did we get here? If you haven’t been paying attention in the last twenty years we lost most of our manufacturing jobs, yep that “big sucking sound” Ross Perot warned us about..but he was attacked by the media as a radical…just like today…Our country isn’t going anywhere, anytime soon until our politicians offer these companies tax free incentives to return they’re manufacturing to the US or restructure this failed free trade idea.

This is just a plot made up by the American government to show that America has a weak side and to provoke other countries. America is very manipulative and controlling, the figures that are shown are made up. The American government is lying to their citizens and lying to the rest of the world. What will stop them? If we can’t stop them from lying to their own people, then we will not be able to stop them from attacking us. Soon America will be in control of us all because we couldn’t stop them at the beginning.